Tongfang joins tablet rush, buying Ereneben

Chinese computer maker Tongfang Co announced Thursday it would acquire a leading domestic tablet producer, Beijing Ereneben Information Tech Co, for 1.37 billion yuan ($220 million), in a bid to expand its business into the growing tablet market.

Tongfang expects the deal to help the company cope with the gloomy global personal computer (PC) industry and gain a position in the promising domestic tablet market, the company said Thursday in an announcement on the Shanghai Stock Exchange.

The Beijing-based business tablet firm Ereneben accounted for 3.6 percent of China's tablet market in the third quarter of 2012, ranking third ahead of Samsung Electronics Co, according to the latest data from Analysys International.

Data from US market research consultancy HIS iSuppli indicated that annual global PC shipments dropped 1.2 percent year-on-year in 2012, while the number of tablet shipments surged by 76 percent year-on-year to 123 million.

Another US market research firm NPD Group revealed that last year saw more shipments of tablets than PCs in China, which became the world's second largest market for tablet consumption.

Despite the strong domestic demand, Tongfang's goals will be hard to achieve, given that counterparts in China and abroad including Lenovo Group and Apple Inc have already seen this lucrative opportunity and increased their attention to the Chinese tablet market, Li Yanyan, an industry analyst from Analysys International, told the Global Times Thursday.

According to Analysys International, US technology firm Apple Inc's iPad seized 71.42 percent of the Chinese market in the third quarter of 2012, followed by China's Lenovo with 10.5 percent.

The fierce competition may give Ereneben a hard time maintaining its third-place position in 2013, so the acquisition could contribute little to the development of Tongfang, Li said.

However, Wang Yanhui, a Beijing-based independent industry analyst, told the Global Times Thursday that if Ereneben's tablets continue to target businessmen and government workers after the acquisition, Tongfang may offset the losses from its PC business.

Ereneben's business tablets have sold very well in recent years, and it prices its products even higher than iPad, said Wang.

Tongfang's Thursday announcement said that Ereneben saw a yearly growth in net profits of 159.3 percent in 2011 and 25.3 percent in 2012.

The US information technology research firm Gartner Inc estimated that companies are expected to purchase 13 million tablets in 2012 and the number will reach 53 million in the following four years.